Hyderabad: 10% luxury tax on private hospitals has docs fuming

The commercial taxes department (CTD) has stirred up a hornet's nest by slapping 'luxury tax' notices on 150-odd private hospitals in Nizamabad and Warangal in the last two weeks.Prabeerkumar Sikdar | TNN | December 26, 2015, 09:20 IST

A private hospital in Gurgaon has launched cutting-edge imaging technology for early cancer detection, which works on a combination of m-Dixon and diffusion weighted imaging with background suppression.Hyderabad: The commercial taxes department (CTD) has stirred up a hornet's nest by slapping 'luxury tax' notices on 150-odd private hospitals in Nizamabad and Warangal in the last two weeks.

The notices were sent as part of implementation of a new policy under which 10% luxury tax is to be collected from private hospitals providing special rooms with TV and air-conditioning facilities with retrospective effect from June 2, 2014.

"We will take legal recourse to stop the department from collecting this so-called luxury tax as it is not just impractical but also illegal. This new tax will financially bleed thousands of patients as THANA members will have no choice but to pass the burden on to patients," said Dr D Narayan Rao, president, Telangana Private Hospitals and Nursing Homes Association (THANA).

While not ruling out a possibility of a strike by nearly 2,500 THANA members, including 1,200 hospitals in the city, Rao told TOI that the move would affect them as well as the patients who would have to bear the rising medical expenditure. In fact, it is estimated that the 1,200 hospitals in Hyderabad and Ranga Reddy districts would have to annually collect Rs 36.5 crore more from their patients if forced to pay up the new luxury tax.

"Though CTD Hyderabad has not yet issued notices to us, the moment they start coming after us for collection of luxury tax, many of our members would have to shut down. This is because 80% of the 1,200 private hospitals in Hyderabad have less than 25 beds and they would be hard hit," explained Dr B Narender Reddy, city president elect of THANA, Hyderabad.

Barring 15 top corporate hospitals, there are about 10,000 beds available in 1,170 odd nursing homes and hospitals in the city. These special rooms are given at an average of Rs 1,000 per day of hospitalisation.

Saying that equating treatment with luxury is wrong, Dr Narender Reddy rued that if the state is adamant on collecting luxury tax, hospital managements would have to charge at least Rs 100 more from each patient admitted in the special rooms.

Interestingly, it is the impending Greater Hyderabad Municipal Corporation (GHMC) poll that is said to have deterred the commercial taxes department, Hyderabad, from sending out luxury tax notices to 1,200 private hospitals in the city.

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